Senator PRATT (Western Australia) (12:31): I am delighted to speak today on the Clean Energy Finance Corporation Bill 2012, because I believe that in time it will be looked back on as a key Labor reform and one that is part of an overall transformation of the Australian economy towards a clean-energy future. We know that it is vital, because all credible economic analyses say that, if you believe climate change is real—and I certainly do—and therefore that economies around the world must adapt, put themselves on a low-carbon footing and de-link their economic growth from their carbon intensiveness, then these are the kinds of steps that we must take in order to reach that goal.

This package of reform, which I recognise has been worked on by many groupings across the parliament, includes, of course, a price on carbon and the Clean Energy Finance Corporation. These are very important steps for our nation to take, not just to stay ahead of the game but, frankly, to catch up—because many countries around the globe have made far more substantive steps than us already to transform their economies. So I think that the Clean Energy Finance Corporation, in conjunction with a price on carbon, and the renewable energy target, are absolutely fundamental to our nation's economic future. But, more to the point, they are also important in our global effort to address climate change and to encourage other nations to do the same.

We know that the renewable energy target and the price on carbon will not actually be enough to get the job done. Because, we know what we face in this nation—and, indeed, globally—is a market failure when it comes to getting renewable and low-emission technologies off the ground. Those crucial reforms, expanding our renewable energy sector, will require a significant level of capital investment in our nation, so there are some barriers we need to overcome in order to do that. These barriers include Australia's access to low-cost fossil fuels, new technology risks and the costs to early movers. These are things that we need to adjust for.

As confirmed in the report of the expert panel into the Clean Energy Finance Corporation, Australia's large reserves of low-cost fossil fuels, like coal, have made Australia slow to move on clean energy. That leaves our economy in grave danger, because if you accept that climate change is real, and that we need to de-intensify the carbon in our economy, then you accept that at some point we need to work out how to transition the carbon intensity that is there in our cheap fuel. These are the kinds of steps that we can take in order to do that: pricing carbon, our Clean Energy Finance Corporation and renewable energy targets.

Expanding our renewable energy sector will require significant capital, and renewable energy companies are competing with large, well-established carbon-intensive energy producers. So we now want to make these transitions in a way that will protect and create Australian jobs. We know that we will have compulsory industry participation plans for all CEFC funded projects. That means that, as we transition to a low-carbon economy, Australian companies and Australian jobs will be considered front and centre as part of those plans—and that means the sourcing of materials, parts and equipment for these clean-energy projects.

So while we have an opposition that is crying foul over a carbon price, which they claim will cost Australian jobs, the truth is that the green economy, de-intensifying carbon in our economy, is actually about the creation of jobs—and new green jobs that will be embedded right throughout the economy. Participation plans will make sure that Australia not only 'greens' its economy but that our workforce is also developing these skills in well-paid jobs—greens skills in jobs right throughout the economy. It means that our workers will develop the skills to construct green buildings and to retrofit existing building, and we know that that is the way of the future for our nation.

We know what we confront as a nation in relation to investment in clean energy infrastructure is a significant capital market barrier that has, thus far in our nation's history, really hindered the financing, commercialisation and deployment of renewable energy, energy efficient and low-emissions technologies. So we have here a smart Clean Energy Finance Corporation, which will be brought together to do that properly.

The CEFC will not provide grants. It is intended to be commercially oriented and make a positive return on its investments. We know that it will invest in firms and projects, as well as manufacturing businesses, utilising technologies that focus on producing the inputs required. It will not invest in carbon capture and storage technologies. The CEFC is not intended to compete directly with the private sector in the provision of financing to these businesses. The CEFC will act as the catalyst to private investment which is currently not available and therefore contributing to reducing carbon emissions and cleaner energy.

I would like to note that the provisions in this bill stand in stark contrast to the coalition's policy. Their alternative is simply to set up a $1 billion fund, without the rigorous commercial guidelines that we think should be there. They would set up a $1 billion fund to provide grants, presumably to those people who can convince the coalition that their proposals are worthy of support. If ever there were an example of anyone trying to get in there and pick winners, that is the coalition's policy in their $1 billion fund. Labor has a market price mechanism, renewable energy targets and a robust process within the Clean Energy Finance Corporation, so that we can transition our economy in a responsible way. As we know, the coalition is quite divided, in many instances, on their belief in climate change. It makes a mess in relation to their policies on how to responsibly go forward on this question, because they have turned their back on market based mechanisms. Their billion-dollar energy fund does not meet the kinds of thresholds that would give us any confidence that we are going to be able to transition our economy into a low-carbon future. Absent from their policy, I believe, are commercial principles that would even require you to examine your return on investment.

This legislation has come before us after significant and important work done by the expert committee. I would like to commend the work done by Ms Jillian Broadbent. She is an eminent Australian who has 30 years of experience in banking and business. She is also linked with universities. I believe she is the Vice-Chancellor of the University of Wollongong. I think she is very well placed to lead the expert panel and to consider their submissions. I am pleased with the landing point that this legislation has arrived at.

There are indeed some alternative proposals to the legislation before us today. For example, one would involve us doing nothing. But what are the consequences of doing nothing? It would mean that our economy would fall behind. As was highlighted in Senator Milne's remarks, we are facing an energy revolution globally. We know there will be massive changes in the global economy pushing us towards investments in renewable and low-emissions technologies. We already have seen many of our great technologies go offshore without the investment being made in that technology here in Australia. If we miss the boat on this, it would be like missing the IT revolution. It would be like being left behind on all of the enormously important economic investments and changes that have already happened in our world. We simply cannot afford to be left behind on that front. So it is perfectly reasonable that we should have a clear strategy, through a clean energy finance corporation such as this, to work through which companies have a lot to offer in the renewable energy space and to work out which of those companies deserve our investment so that we can catch up on the game and then get ahead of it and not leave the Australian economy behind.

The alternative could be to do nothing, but the consequence of that would be to leave behind Australian inventions, research and jobs. It also would mean leaving behind the Australian economy, because we would be stuck in a dead-end economy that is highly dependent on dirty energy. In the long term, when the globe finally decides it must act on climate change—and many are already acting—that would leave all of those industries at a complete dead-end because they would not have the money or the investment there to suddenly move from one to another. They would be locked into the old way of doing things while the rest of the world has changed. I do not want to see Australian jobs left behind, so it is high time that the coalition caught up on this front. I do not want to see this massive dislocation in the future. I believe the nation will hold the coalition to account.

In closing, I want to say that I am very proud of this package of reforms. I believe that clean energy will be the way of the future for our nation. It is about the supply chain that feeds into all of the clean energy projects around our nation. At the moment, there are too many risks associated with investing in these technologies on a commercial basis. But we know that there is a commercial basis for these investments, and it will be in the best interests of our economy.